Dissolution of the franchise agreement justifies dissolution of the related lease agreement
Court of Gelderland
By judgment of 22 January 2014 (ECLI: NL. RBGEL: 2014: 377), the District Court of Gelderland reached a remarkable judgment for the franchising practice regarding the lease agreement between various parties associated with a franchise agreement.
In short, the court upholds the franchisee’s appeal for dissolution of the franchise agreement for breach of contract. Simultaneously with the franchise agreement, the franchisee entered into a lease agreement with regard to so-called cardio scan equipment. Although the lease agreement was entered into with an independent leasing company and it was expressly stipulated in the franchise agreement that the lease agreement would continue regardless of the termination of the franchise agreement, the court nevertheless reached a different conclusion.
Because the leasing company, without verifying the actual situation, allowed a large number of lease agreements to be concluded within a relatively short period of time, it accepted the risk that the intermediaries involved would give rise to the expectation that this was a total package in terms of combination with a franchise agreement. An additional factor was that the leasing company stated that it was aware of the franchisor’s payment problems. The court therefore concludes that there are such related agreements that the dissolution of the franchise agreement can also lead to the dissolution of the lease agreement.
The court also disregards an appeal to the general terms and conditions with regard to the exclusion of the power to suspend the lease installments due to the unreasonably onerous nature thereof.
In this judgment, the court thus attributes part of the duty of care to the leasing company and accuses it as a whole of adopting an attitude that is too passive, which ultimately justifies dissolution. In fact, this constitutes an extended duty of care at the expense of those who also benefit from the franchise relationship.
Now that operating assets for the operation of franchise companies are increasingly being leased instead of being purchased with a bank loan, this requires a more active attitude on the part of the leasing company. The question arises to what extent such a liability claim could also be extended to other financiers of franchise operations. After all, the line is thin between a leasing company and other financiers. Under certain circumstances, other financiers may also be expected to adopt an active attitude in relation to the franchise proposition and the financial obligations to be entered into, whether or not in relation to forecasts and/or the financial strength of the franchising organisation. On the other hand, it is dogmatically possible to bargain with the rather far-reaching reasoning of the District Court of Gelderland.
Mr J. Sterk – Franchise lawyer
Ludwig & Van Dam Franchise attorneys,franchise legal advice. Do you want to respond? Mail to Sterk@ludwigvandam.nl
Other messages
Bankrupt because the franchisor refused to sell the franchise company – dated January 28, 2020 – mr. AW Dolphin
The District Court of The Hague has dealt with a request from a franchisor to declare a franchisee bankrupt.
Prescribed shop fitting – dated January 28, 2020 – mr. AW Dolphin
The Midden-Nederland District Court has ruled on whether a franchisee is obliged to carry the shop fittings prescribed by the franchisor.
Ludwig & Van Dam attorneys summon Sandd and PostNL on behalf of the Sandd franchisees – dated 9 January 2020 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) has today summoned Sandd and PostNL before the court in Arnhem. The VFS believes that Sandd and PostNL are letting the franchisees down hard.
Article The National Franchise Guide: “Why joint and several liability, for example, next to private?” – dated 7 January 2020 – mr. AW Dolphin
Franchisees are often asked to co-sign the franchise agreement in addition to their franchise, for example. Sometimes franchisees refuse to do so and the franchise agreement is not signed.
Ludwig & Van Dam Advocaten assists Sandd franchisees: Franchisees Sandd challenge postal monopoly in court – dated 12 November 2019 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) is challenging the decision of State Secretary Mona Keijzer to approve the postal merger between PostNL and Sandd before the court in Rotterdam.
Franchisee trapped by non-compete clause? – dated October 21, 2019 – mr. AW Dolphin
The District Court of East Brabant has ruled that a franchisee was still bound by the non-competition clause in the event of premature termination of the franchise agreement.